Adding Pay for Performance to the Government Rewards Strategy

Adding Pay for Performance to the Government Rewards Strategy

Running government like a business means applying the best practices from private sector companies to government operations.  Under Governor Ricketts leadership in Nebraska State government we are always looking for innovations from the private sector as a source of inspiration for our own continuous improvement efforts.  Over the past year we’ve had a lot of success doing just that, shrinking government, consolidating agencies, and expanding employment opportunities for military families.  One of our recent innovations was to revamp our State’s compensation structure and move to a “pay for performance” rewards strategy.

Historically the State has only allowed our employees to achieve wage growth through annual “cost of living” increases.  This approach has made it difficult for the State to differentiate talent, retain top talent, or align our rewards investment against organizational goal attainment.  Perhaps most importantly, that approach created disengagement among top performers who don’t always feel like their contributions are recognized by the State.

While not common in government, financial rewards for performance are a common compensation strategy in the private sector to incentivize performance and retain top talent.  That’s why we’re applying that best practice in State government beginning in 2018.  Using money already budgeted for cost of living increases we will instead reward our teammates for achieving their goals in a budget neutral way.  This approach will align our organizational goals with our compensation philosophy, and give supervisors at all levels another tool to manage and reward their teams.  Government administrators and public sector HR practitioners should periodically review their own organization’s compensation philosophy to make sure it aligns with the organization’s goals and industry best practices.

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